Frequently Asked Questions

About BMG

We now have over 150 properties under management, and 30+ consecutive quarters of consistent performance. We have never missed, nor altered, a quarterly yield payment for any investor. We have reached $105.4 million in capital deposits over the life-span of the company and currently have a nearly 70% reinvestment rate from existing investors.

As with any investment, there are risks, but our fund is intentionally a very conservative, low risk investment. The risk factors are covered very thoroughly in the Private Placement Memorandum (PPM), but some of the common ones are: risk of store closure, interest rate risk, and concentration risk.

No, this is not a requirement. Most, but not all, of our investors are veterans. The fund is run by veterans with a mission to increase the economic power of veterans and industry-leading professionals. We also make regular donations to veteran charities after the payment of yield to our investors.

To be accredited, you would need to have a net worth of at least $1,000,000, excluding the value of your primary residence, OR have an income of at least $200,000 each year for the last two years (or $300,000 combined income with your spouse). In addition, persons who carry specific professional certifications are considered sophisticated and accredited.

Our current open fund, BMG Yield Fund II, has a 6% annual yield paid in quarterly installments beginning from the date of investment, plus 60% of cash from capital transactions (following payment of Class A Member preferred return and return of Class A Member capital).

Yes, absolutely. The key is getting you set up with an account with a self-directed option, and then it’s just a matter of directing that investment amount to one of the BMG funds.

By using a third-party administrator, you never take possession of those funds, and they maintain their tax-deferred status through the transfer as long as they stay in that account with BMG. You will still receive quarterly statements and see how your earnings are accumulating and the impact of annual compounding.

We now have over 150 properties under management and 30+ consecutive quarters of consistent performance. We have never missed, nor altered, a quarterly yield payment for any investor. We have reached $109.9 million in capital deposits over the lifespan of the company and currently have a nearly 70% reinvestment rate from existing investors.

Yes, we have fully subscribed and wrapped up two funds.

In late 2021, we liquidated our first fund, STRAC Fund I. This $5MM fund was started in 2015 and closed out early due to highly favorable market conditions. All investors received their full principal investment and all targeted returns. Many were so pleased that they chose to re-invest in one of our open funds.

MM Associates Fund I Partners is our $5MM fund, founded in 2018. It was fully subscribed ahead of schedule in 2019 and liquidated in early Q3 2023. All original capital was returned to investors with a preferred return scheduled for Q3 2023. Again, many investors selected to re-invest their capital in one of our open funds.

Funds

The target duration for each Fund is seven years from completion of the capital raise. We accept new investors and purchase properties on a rolling basis until we become fully subscribed. This practice benefits our investors as they begin to earn returns from the first day of their investment and do not have to reserve money until a capital call, creating a drag on return.

At the end of a Fund’s life, investors can expect to receive their original investment principal and any outstanding preferred return due. We cannot promise, but we will most likely have new funds available for re-investment at that time. If you invested retirement funds from an IRA/401K account, the principal and accumulated returns will be returned to your self-directed account. You can keep them there or re-direct them to a new investment (possibly a new BMG fund).

Investment decisions are all based on risk vs. reward. We do not try to time market cycles. We buy strong assets that can withstand multiple economic environments. We take a more “slow and steady wins the race” approach. Because of this, we can and have paid our investors as targeted. This makes BMG a great place to park that portion of your portfolio you have earmarked for a conservative, fixed-income investment.

We also emphasize that a high percentage of our investors choose to put more capital in our funds of their own initiative. When they see their “higher-risk” ventures getting hurt vs. the consistent quarterly coupon payment that BMG funds pay without interruption, it motivates many to shift more capital to BMG. In fact, we have a nearly 70% voluntary reinvestment rate from our current investors.

We would like to first emphasize that nothing we do will dilute the value of your investment. Period. Fund overheads are kept at a minimum; we run things “lean and mean” with an investor-first mentality. That said, we do have costs associated with running the fund and maintaining the properties, and we utilize two fees to pay for these expenses:

  1. We administer a 2% acquisition fee when we close on a property. This fee is allocated to the property’s cost basis at closing and has no impact on your capital basis or returns.
  2. We also have a property management fee of 0.375% quarterly. That comes out of the rental income from the properties. It has no impact on your capital basis or returns. Our property management fee is subordinated to all investor’s current yield and this is explicitly stated in the Private Placement Memorandum (PPM).

We do not work with any brokers, so you will never see fees for commissions, and your principal will never be diluted for use in running the fund. Your yield will always be based on your original investment amount unless you decide you want to reinvest the quarterly yield, in which case the yield is added to your original principal basis and compounded annually.

Our funds are based on patient, long hold investing. To accomplish these stable and durable returns, capital must remain in the properties for 5 to 7 years on average, so, our investors do not have redemption rights. This means our funds are illiquid, and you should not expect to have your initial investment returned to you until the fund life ends. We can work with our investors on an emergency basis to sell their member interests to other investors. This is not guaranteed to happen quickly, if at all, since no secondary market currently exists for our funds.

Prospective Investors

Yes, you can choose to either take regular payments (by ACH) of your quarterly yield or reinvest and compound them annually if you wish.

Yield payments from DST investments cannot be reinvested. Please consult a fund manager for more information regarding a DST investment.

Our real estate funds are LLCs and are taxed as a partnership. The LLC files a Form 1065 Partnership Return each year, which shows the income/loss for the entity. This entity filing allocates the income/loss to each investor via a form K-1.

It is important to note that your quarterly yield payments are not standalone taxable events. They are considered a distribution to you as a member, not an interest payment, and you do not receive a 1099 interest statement each year.

You will need to consult a tax professional for guidance on how this would impact your personal taxes.

The company we work with to prepare tax filings for the Fund is Cherry Bekaert LLP. They are one of the top 25 US accounting firms and are the largest CPA firm headquartered in the Southeast.

Each year, Cherry Bekaert files consolidated state returns for the members of the Fund. As a result, our investors typically do not have to file state returns where we own properties, except in the state where the investor resides. This is a service BMG provides to its investors at the company’s expense.

Note: DST taxes are handled differently. Please consult a fund manager for more information regarding a DST investment.

We currently target 50% bank debt, with the balance coming from investors. We believe this is a healthy and appropriate balance at this time. Investors do not guarantee any of the fund debt.

We strongly believe in open communication with our investors. At any point in time, you can pick up the phone and call any of the fund managers or send us an e-mail, and you will get a rapid response. You are also welcome to visit our Richmond office at your convenience – we have an open-door policy.

Each investor has access to their own secure internet portal, serviced by Juniper Square. The portal allows investors to access all their documents, statements, tax documents, and account status in real time.

No, there are no capital call requirements for any of our funds. There are capital expenses beyond typical maintenance, which arise occasionally, such as roof replacements, HVAC replacements, and parking lot resurfacing, but these are taken care of from capital reserves. Our experience indicates that a 0.5% reserve of revenue per location covers all required capital expenses.

Property Investment Strategies

Each BMG fund buys the same type of single-tenant commercial properties – assets we call “defensive” in nature, meaning they will perform just as well, and arguably even better, with a downturn in the economy, i.e., recession, COVID-19 crisis, etc. Most of our properties are in the discount retail segment, i.e., Dollar General and Family Dollar, and located in rural communities. These locations are often the only means of essential goods for their communities and are a vital resource, making them very secure properties to own for an extended period.

We generally acquire properties across 20 states, ranging from Texas in the Southwest, North to Illinois, East to Pennsylvania, and South to Florida. We are not limited to those states but have a concentration of assets in that region of the US. To view the map of all of our locations, click here.

We have a documented alternate use strategy (Plan B) for every property we buy. As long as the lease is in effect, the tenant is required to pay rent even during a store closure. Our typical Plan B is to seek an alternate tenant among similar companies that operate in the market.

A fundamental objective of our diligence is to ensure we are buying assets with a strong likelihood of continued performance. One of the absolute best ways to ensure this is a successful track record. Previous lease renewals are a tremendous indication of success for that specific location, whereas brand-new units are still not fully proven and may or may not make it. Ironically, and to our benefit, the market overvalues the new locations and undervalues the older, proven locations – this fits our strategy of value purchasing.

We first want to emphasize the defensive nature of the assets that we acquire, capable of withstanding swings in the real estate market, even potentially a crash. Substantial due diligence goes into each asset we purchase to ensure it meets these criteria. Speaking specifically to the real estate market, we are not as concerned about underlying property values as you might think. What is most important to us is the strength of performance of the specific location and the strength of the corporation guaranteeing that lease and rental stream.

It is helpful to understand that a lease is a strong contractual obligation, and the corporation guarantees to pay us the same rent regardless of real estate market fluctuations or overall economic cycles. It is from the collection of rent that we pay investor returns, bank loans, and the costs of running the fund – which is unrelated to the underlying property value. And again, by focusing on defensive assets – the corporation itself should be doing just as well, and possibly even better, in a down-cycle.